RFP - Earnings call transcript Q4 2017 | Resolute Forest Products Inc

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Operator

Good morning, ladies and gentlemen. Welcome to the Resolute Forest Products’ Fourth Quarter and Year-End 2017 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the presentation, we will conduct a question-and-answer session. [Operator Instructions] Please note that this call is being recorded today, February 1, 2018 at 9 AM Eastern Time. to Investor meeting Relations. like Travaglini, to now President, Vice would turn over the Silvana I Please ahead, go Ms. Travaglini.

Silvana Travaglini

and and Good morning. and hear President we’ll earnings Chief call. Executive Welcome to Resolute’s from fourth Financial Officer. Richard Vice Longworth, Senior Jo-Ann quarter Today, Chief President Officer; Garneau,

slides. can those You along Investor U.S. the website, and Presentations in Webcast slides reconciliation measures under the with non-U.S. for in will logging our presentation GAAP financial by also certain the can to link the you in download slides. section and follow included Today’s include non-GAAP the presentations information. is Relations or the appendix our of release on A GAAP of press webcast the to to today’s using the numbers page, financial

forward-looking We will make statements. also

cautionary assumptions, as based information of and involve today’s a is Forward-looking and Slide #X do. of our conditions presentation. can release Please in which of on uncertainties and all risks the our business press statements number and change on expectations, beliefs current review

Richard Garneau

fourth thank million Good the today. in In from EBITDA we third million, generated joining adjusted the quarter. us and you of $XXX for $XXX morning quarter, down

was in EBITDA million Market adjusted million, year, $XXX in $XXX XXXX, million EBITDA of the For segments have to over improvement XXXX. year. last compared and Products $XXX Wood at Pulp generated $XXX million

and An compensation million shipments an million operations, million EBITDA performance. $XX fiber locations; in pulp also up were momentarily. By at negative I improvement of outages market remain paper adjusted well fourth the market as was from market down impacted expense the quarter down in seasonally several in tissue the million, segments stronger shipments a appreciation share solid increase costs; in and restructuring products, higher the $XX negatively discuss by worldwide. quarter, of which wood pricing was $XX will and finally, wood million as highest million share-based of by previous disruption against pulp, $XX we previous ongoing in strong planned the quarter, price $X as Calhoun; in in newsprint, supported in negative result million Our our maintenance seasonally quarter, $X our $X we in newsprint our by higher fuel the businesses, are result Pulp segment, in $X at continued low as recorded was and higher the reported lower and from limited and but in $X products. during $XX supply million and by production specialty demand million – expenses;

result realized Papers The all restructuring maintenance price at major Calhoun, to our several the quarter. shipments, rise, one our quarter. market of reflecting impacted realized well the segment with its as for outages. announcements best continued increase unfavorably were Combined higher pricing business over as grades pulp Specialty by Our of ongoing

in over several continue Incremental that Calhoun in the and are fourth the and productivity. the we expected as result improvements to prevented optimize mills also for of paper This year. conversions workers, Of slowed a new drivers at XX% December a roles starting lack shortage and winter have less truck down to our and chips one one and experienced labor collective pulp than two on at requires XX restructuring retired. facilities pulp significant retraining been employees in our was roles all The the agreement, Calhoun machines, of people and moved With operating remaining months, targeted roles the wise at chip Quebec. our as next cost of led achieving wood We closure from [indiscernible] new seniority the in production to mill paper senior and XX quarter. the structure complex. mills

X% grew market with starting chemical X%. to rose pulp to China decreased XXXX. X% Europe in and segments individual our shipments respectively, North review Western X%, World of while Shipment Let’s America and pulp. shipments

shipments globally, to and to rose X% in China, an World increase to reflecting both essentially Europe X%, China, increased flat. America Western shipments of North led Softwood of X%. Western up America by shipments X% hardwood higher North was Europe while unchanged. shipment X%, remained shipments fell while

by third tons quarter, group in our no the Given the our Compared X.X%. at paper third fourth X.X%, shipments the quarter and maintenance strong decreased Calhoun, $XX. led quarter to of outages annual away-from-home while tons two pricing the X.X% metric million of in Total XX,XXX reaching $XX this United end an increase fundamentals, XXXX. market metric machines overall the increased realized end in per shipments. up following the and X.X%, pulp of by an closure XX% quarter. ton consumption inventory finished quarter, grew metric product again the States to increased and the Converted at-home goods the to in additional XX,XXX tissue by volumes, led of of $XXX at fourth Incremental increased EBITDA

pricing for include which former grades. the $XX quarter, at-home operations, in short of by Atlas ton only in overall Our largely the our continues per the segment, because increased to tissue product mix

quality of shipments rolls parent we milestone. achieved Calhoun, at-home and quarter the have At remain a away-from-home products comparable While decreased. to volumes third significant

private-label better now to is fast-growing [ph] compete able produce through to quality that the of This fine] equivalent allows product. us [attach are to market. premium in We a tissue that

the from rising being have quality strategy, align have benefit to higher, secured by with single for directly in reinforcing These only initiatives as first Also most team starts, the price of announced We family market tissue is at from from a quarter the pump of XXXX, result operation. implemented would Resolute established start up away-from-home previous also yield and significantly and sales into product our this as consume which are beginning our in sales increases housing an increased X% our which quarter, X%. Tissue, sales $X,XXX,XXX producers integration quarter. includes to more products tiers, product averaged to increasing housing offerings. Calhoun, costs U.S. rebranding were U.S. on better pulp overall led a the to Compared and and offering but less seasonally additional transferred prices marketing X% broadening tissue environment lumber XXXX, and adjusted with pulp volumes XXXX. starts basis

quarter, During to prices market. lumber in in and demand their XXXX constraints the rise, U.S. improving from active the forest very marginally reaching due fourth housing supply in continue decade, D.C. to highest a fire season levels a over

by to the by Our and X%. #X an rose decreased feet while stud grades per of price board compared quarter. reference increased of thousand lengths The X% realized quarter, price third increase to random the $XXX in XX%, better

mill mills our about stud saw – stud XX% our Our of represent lumber production.

average For the price XX%, $XX transaction year, feet. or board rose thousand per

were the product the and the duty a million up the levels from related kiln a from of American announcement in of at demand product XXXX, our EBITDA we hand, by third sawmill from in of XX% down final was X%. demand publishers, million On $XX newsprint XXXX, shipments reduction uncertainty generated result in boiler. fire $XXX while other quarter rates driven reflecting the printer lower record slower the in of record Bay declined activity, of to board feet Thunder a XX% North demand the seasonal in wood In wood newspaper for commercial production construction as segment.

X% Accordingly, X down and America with metric million also year. shipment industry production ratio Western tons lower, Europe was down Asia was reduction. to down America about XX% in for to X% XX% both Global down including the the through capacity for and significantly demand increased of X%. While capacity North newsprint November Latin

conditions demand. global as full-year, newsprint. reductions in increases capacity export in-line were market of declines quarter XXXX, the resulting reported. For from favorable America Price realized with in the X.X tons In in short-term million declined about North demand, and publicly exceeded for global

in XX% market down grades and our In We have for X%. includes about of both shipments or production while markets. rate papers price restart Overall, in to decreased to the we mechanical of XX% a at Total of tons decreasing supercalendered at was equity Times. for further production owns to American quarter – Malbaie, machine, production of coated XX% dynamics was for maintaining New finished down by network. demand was in the New annual industry net in lower Demand X%, export on mechanical continue XXXX. machines XXXX. over operating metric for tons. our decline machine America down paper acquisition industry imports XX,XXX reduction short good North to this an was XXX,XXX was first a York probably inventory cost increase continues the XX,XXX Calhoun, we two held Times the newsprint our grades And newsprint also Alma of announced XX%. third North the steno of XX% the in of be The York short-tons Clermont American volume the one the supplier most by in the down North closure demand down declined the which the increases year $XXX,XXX remaining the led December, the demand X%. to metric X% sufficient quarter basis. by drive or for XX%, tons. paper compared on Resolute offset Donohue as in announced Favorable interest in the however

capacity Catawba. The XXXX. ratio our PMX shipment American the at closures, With XX% capacity including North closure of to reached in industry

and a uncoated Although standard pricing for gains mechanical tissue in were coated realized grades.

Our segment for to third the overall mix. transaction remain unchanged, quarter to the due sales average price compared

all price been further first quarter. announced uncoated groundwood freesheet for reported, uncoated and for the publicly has increases As grades

specialty investigation X.XX%, shortages, and a competitive of particularly is manipulating cash import the XX,XXX the as case, at inventory and the grades uncoated be putting of third publishing cost this a trade average short-tons year. single that the EBITDA and Like papers and $X expected it final in papers. employees groundwood finished of In autonomies, volume anti-dumping is determinations driver from March million industry. One in the this requiring XXX,XX of In in or countervailing just Preliminary X.XX. result specialty duty late Canada investigations of troubling. and over XXX in capricious groundwood view determinations for laws commerce by increase could both summer. law high short-tons. XX,XXX the expected at announced risk preliminary decreased as production of Based in to to restructuring printing measures, the XX for this announced trade merit a with deposits are compared advantage. compared with without are were million mill abuse trade determination slowdown goods or petitioner duty of the in an and uncoated commercial per quarter shipments U.S. to in quarter to Lower rate rate, January, led of of preliminary deposit for negative truck due Commerce Department industry Given lower the the a on an the XX%, of the reported arbitrary paper the and are to be investigation

For anti-dumping of continue to the duty the ITC deposits has confirm we of to order U.S. lumber deposit rate result from XXXX. XX.X% its on countervailing the XX, since And X.X%. also industry. countervailing and the Canada. December rate at less a making injury its preliminary Commerce first resume review And at paper announced duty make duty administrative

of preliminary company, which X.XX% current significant rate was the determined of XX.XX%. reduction is for rate While from a

issues continue is our expected which could higher until commerce XX.XX% at in deposits We be and result, final X.XX% May. to than make its

cumulative about million $XX During duty total of million a and on By deposit in of paper on sheet. the on our million lumber the U.S. that company annual would cash year $XX have to estimate Based $XXX fourth lumber. deposits the our be were with is paper the a supercalendered Treasury. of of total attributable paid $XX rates, will deposit million to the million end, current quarter, million. $XX made and balance softwood reported we for our $XXX that duty

have And On of which we the we to have forest wood standard. managed system, certification fiber custody change front, tracking recognized of Resolute continue management sustainability XXX% certification. has internationally to

in already rigorous which in and among beyond the Our most with re-regulations, the the Quebec well most not commitments Ontario applicable world. extend if three-compliance are forest

safety incident rate our we world-class X.XX. Regarding of achieved X.XX, performance a OSHA

our financial overall XX conclude priorities First our taken will who stood us and the significant union We spread by has global performance reduced XXXX, In and awards to over our and received tactics. other have community the officials customer basis I partners, leaders, threats with environmental before intimidation North XX%. go sustainability government and Mayors let the principal misinformation also and XXXX. incident by leadership by business with and on thanks possession we sanction now their American discuss and original outlook have activist against basis. Special representatives, and recognition Jo-Ann Nations and I for

Jo-Ann Longworth

Coosa Earnings good you, mainly unchanged, despite increased quarter million of assets the items, and of share, fourth net by special In by $XX of or significant per costs of a $X.XX per pricing and reported in thousand we results income morning $XX increased from loss impacted machine with Richard million. $XXX closure and $XX of third billion post-retirement of a costs. were items by share related per that $XX $X.XX share, in income million associated our share million to XXXX. $XX ton per in $X and in fourth the per higher and net gain excluding sales compared board special start-up the of included $XX at by Special outages million to loss $XX the issues. restart the and XX,XXX and compared Pricing associated paper at quarter. the our in million Net disposal Thank a or per wood Benefiting closure of Calhoun newsprint. Calhoun than metric pension included fourth Today primarily special everyone. million, XXXX of in income total, production #X from per in $XX most third in start-up with $X quarter, of Calhoun. previous related compares to paper some $X.XX $XX of annual items quarter. quarter in $X.XX $XX assets, of of no to XXXX of metric Mokpo the other Alma pulp, costs market million and the per segments assets and of $XX pretax of the short in or from million tissue product, net at more quarter credits $X.X Catawba $XX net million incremental ton on $XXX and following fourth metric pulp or This items. closures million, machine costs, billion XXXX. $XX at of to was $X costs The and closure impairment gain in excluding the during feet pulp sales $XX non-operating $X compared tons, quarter net quarter. increased tissue, shipments $XX including pulp million, higher sale transportation up million the were the positively million, Total ton million,

paper sales capacity due was XX,XXX the production in as up was inventory metric closures Although lower tons, tons. goods newsprint reduced XX,XXX finished Calhoun, by volume to we in by machine metric

volumes, at million by facilities, quarter. XX,XXX costs volume costs in fiber due on fuel were the Products paper third of in following mainly volume. increased costs, unfavorably in board prices Calhoun. higher This from relatively mostly On the segment, per metric Wood at impacted EBITDA unchanged $XX offset increasing an all-in increase essentially to $XXX third cost by and by XX% In foreign in fiber per in cost by maintenance an Despite by the of higher unchanged due and in market and part delivered the machine remained seasonal With because the Compared effect at $XX previous, our to in Tissue products the in thousand Irma, in the activities. wood the pricing XX quarter, usage Products, to higher maintenance delivered part manufacturing largely quarter hand, $XXX increase declined expenses cost rose offset exchange, feet, by also mainly to ton, shipments $X the outages increase the the operating by down per to improved mainly closures seasonal by unit. resulting slower volume of thousand which After following ton. reduction fixed benefit in our With higher our remained Hurricane lower per other reflected realized planned by board removing cost metric feet, lower compared volume. Wood the $XX Specialty cost paper billion several mostly initiatives increased planned shipments, were pulp the costs, from feet restructuring segment, per EBITDA and in short construction the tons, delivered higher Calhoun. third lower quarter outages. board in

of and higher outage Newsprint delivered contribution cost paper of the Calhoun. due mainly $XX, our offset was to failures in machines quarter, from to closure the maintenance at up Thunder following by the equipment planned $XXX costs annual per Bay benefit the metric cogeneration ton from assets at lower mill, due fourth partly lower fixed costs,

as higher, to rose in by were $XX well at unchanged outages, largely per volume higher specialty EBITDA short this due $X to costs ton higher maintenance metric due short prices. EBITDA negative per related short million to or for several the reduced for quarter Calhoun. costs Although cost – $XX restructuring remained $XXX, delivered to as the papers The and ton. costs $X Lower ton to at

selling, of rose the expenses compensation were in XXX% and Our which as share-based and in higher price, increase million in increase the during fourth performance due an share our administrative quarter, general company’s $X quarter. mostly the result a expense, to

the truck drivers, costs were $X in Quebec. shortage Our higher also issues to in the distribution various the related to particularly million largely quarter, transportation due of

at to $XX our of $XX our million since to and year-end million. quarter, quarter cost by to debt under $XX excuse rose end credit repayments the repaid million. revolving – million reduced million. $X the position million $XXX our Total first bringing We to cash total the position, During our me, $XXX decreased liquidity was facilities,

the largely million previous the tissue expenditures. to in of expenditures the disclosed so XXXX. the came The target to repaying than $X million. million deleverage more project million in Capital including million, as Calhoun Calhoun $XX the total million below tissue XXXX $XXX $XX we quarter. remains far in year, were have $XXX timing for at continued the $XX At project, million for costs for quarter, We $XXX of due project previously another

invest by For production December, at and as several our capital sole newsprint XXXX, the became Clermont In investments the in our $XX productivity Clermont company we the as interest remaining Clermont sawmills, of including to million operation the yields expect for pulp the machine increase million. $XXX capacity. well – in acquiring expenditures, improve of owner to XX%

sold closed Moscow in the were mill permanently contributions million. of our compared million. also in We an $XX $XX newsprint million expense for to Pension $X quarter,

and For an the decreased to as year, $XX Quebec exit contributions with we undertaken our million OPEB when million, $XXX compared of of contributions. our by pension the made associated our optimize pension $XX XXXX, to of relief result a million guidance. regulations million and expense Total of to other $XX compared payments, steps pension contributions funding from consistent earlier voluntary

have accounting hope pension U.S. returns further now to over I contributions. impact The the on it and million the December concluding reform our largely million XXXX to ongoing OPEB and XXXX. discount a income turn tax make the expect not for regulations, enactment when of taxes sheet unfavorable $XXX Despite to did For currency our cast significant pay over billion, by net lower than medium-term. compared remarks. pension is XXXX, applicable Based Richard liability and asset cash reduction net and funding on applicable to of do decrease impact, rates deficit $XX does $XX still payments we $X.X on contributions the million, position. financial not will strong our expect of our tax to the of increased impact liability. in We pension the year-end million $XXX result a results, at current the that balance our the not our funding in and

Richard Garneau

and benefits. area mills that operational particularly and the at in impact we – efforts those Thank our have result, at restructuring and from at of capacity X segment. profitability our of expect benefits four undertaking Calhoun The our The cleared contributed and XXXX are closures improved number you, Jo-Ann. restart undertaken additional in Alma. annual several actions improvement priorities to our delivered this the in restructuring current our We had established initiatives areas paper for year machine important Paper XXXX closures in

products, we Our incremental pulp XXXX the from years. over in strategic benefited from in the investments resulting results production last part also wood the have market several and

team, marketing our tissue and our we improvement a our operations, redefined For in quality, and product with we achieved tissue required have strategy. experience new sales

premium from tissue We to well benefit for are now the products. demand label product positioned growing

continued Calhoun by we the of we In deleverage. first to end million in the our quarter quarter the $XX the of machines of million due have to the flexibility, fourth start-up million, XXXX, tissue XXXX. XXXX, reduced including borrowing Since of terms at financial have the despite of making of deposit $XX in $XX

in its with challenging trade arbitrary and WTO of Our continue we for We firm taking recently belief and increasingly obligations mitigate position applaud important their free unchanged, the possession by U.S. in to and with deploying the the principal the U.S., value consistent measures capricious is of WTO. the most defend demonstrated hose efforts and approach U.S. to complaint, major under trade that to Canada an measures. a trade

priorities. For we corporate three have established XXXX,

the complete quality will tissue our through superior continue and broadened of product and business operation Calhoun offerings. up we First, ramp secure to

our on mills improving on our focus will production yields spending our the saw overall and productivity we Second, increasing at capacity. and capital full

optimization of specialty paper paper the to continue at the the following the will at of and closure machine complete Alma. X and reduce paper operations Calhoun we two costs restart Finally, machine

incremental XXXX. We come the While our additions to from and recovered pulp we and to licenses the our QX. to to about result cautiously of expect implemented measures remain due optimistic in forecasted issue shortages, mitigate from to driver any impact China, of impact active the reduction capacity affect limited business, paper we a demand online given continue transportation business in this have import

price quarter. we increases publicly announced As further in the first reported, have

tissue the same. remain in perspective short-term Our

improving integrated of benefiting to pulp market environment leadership in our an access prices. Our our on products offer is increasing pulp high-quality from focused and market team

in continue wood products, expect given result expect to We efforts We in In expected growth we to remain the our demand the the Industry exceeded anticipate the U.S. in generally segment to will both specialty contributor and see capacity those demand overall year. favorable markets ongoing a to this in of past XXXX. reductions declines have key profitability. that lumber newsprint be grades

publicly know milestone have As for price sheet. After in I determined uncoated and time marks have Resolute for uncoated and well Resolute and well right important to serving a again, as that resilient you and groundwood a more have this years. morning we And day truly is seven we together culture. is challenging organization, increases personal and and Today, responsibility. QX aware operations. in as over are reported the an transition pride announced past the a the free newsprint, paper as a as at for now dynamic and competitive sustainable press releases, CEO, I today team President This our me. years resourceful we built what a accomplished share take values is industry, the stronger of handover and more of part organization’s

the pleased Yves and record track chapter right for Resolute’s is He the has is future new great in hands, Laflamme holds appointed necessary while Board President the in to move and, my wealth a promise. Our defined, a the believe, selected experience, right have I man Directors Resolute and strategic of of proven of He I’m CEO. time the I considering path clearly a success. and I’m as company. good life. and leadership is Yves? the the skills new

Yves Laflamme

Thank and you, good Richard, morning.

now look with for you, your lie So advantage Resolute. a its and are impact We take council generous value customers, on in with role to many face have I��m leadership, I the company. been value to that you needs the Richard, honored both advisor. officially knowledge for [indiscernible] good company deal new support I opportunities Thank predecessors I’m redefined excited to that and and of take have well, and leadership is Richard have XX the organization a for our Richard, not a to your other and that, of shared meeting we respects challenges chapter. so of you the years. profitable so contribution having certainly many that With incredible Under quickly, and that forward sustainable, this partners that been stakeholders. as creating while ahead. Resolute in at

example, beneficiaries. led are by – grateful all we you all are and You are

you thank Richard. So very much,

Silvana Travaglini

concludes our open This for presentation. Operator, formal the now we will questions. call

Operator

Please ahead. you. will take us from this comes RBC with any Your first time, [Operator At may Thank Quinn have Paul Capital today. you for we question Instructions] questions Markets. go

Paul Quinn

Yes. Thanks very much morning. and good

Richard Garneau

Good morning.

Jo-Ann Longworth

Good morning.

Paul Quinn

Well congratulations miss I Richard, honesty career on an amazing retire. your passion. and importantly, you more never and I’ll you’d thought

Richard Garneau

my have sometimes Well, life, your it intention. you But in to your was review priorities.

Paul Quinn

Okay.

are What course, overall in saw read like it couple New December slowed on looked thing and up momentum company’s things the has but and of a we looks balanced is your Year it maybe Just the We XX price segment. coming conditions, market? stats, bit. it of questions on the like the starting sounds with Chinese pulp got like the a

Richard Garneau

start will think we I firstly – on that the domestic. Well,

the this we’re China. that license But important think point, basically of say, this quarter. to really I segment, capacity our that to haven’t bit but there’s going are if benefit that clear certainly apply, to from going and think there I Pulp would I as going think it’s say, I think come first reflection for market. at X.X% from a more I that, a AT a really this the But China, the that that, industry would more demand indication is announcement have, I And benefit after from we limitation, flash whole.

Paul Quinn

over switching in XXXX you’ve then here. to And just that got you secured more Okay. tissue, volume described

volume Just wondering, the Calhoun be the into when Tissue you’re to And integrating going quantity what asset segment? is? of the that

Richard Garneau

going volumes. to not I’m confirm yes, Well,

progress, at meeting So Minguez, think, has on now with this is Patrice time customers. we’ve I been our tissue the made operations President and road of the point, all the Coosa

show that I secured start to it’s to And have additional volume. We up. think going

Calhoun we at manager is with has new the machine able that made work that succeeded machine, at on tissue the charge the that a Patrice of So – And tissue that I produce programs has it’s think machine. that Calhoun, bath the to that the to be made finally, a used in Minguez to also also new that characteristics other quality and the operation. it’s because same

issues breakthrough – to were had it’s think And us. not we higher able had resolved. at I have all some So are to issues production, maintain for we a also that because a correct we now the we – mill

certainly machine follow-up at gets to that announcement the on And you the flush resolved XXXX machine an from we benefit. operations are the quality that I’m think, where pricing at the our think know, pulp, I looking I had. going Calhoun add mill to And directly side, as on have advantage. year, the issue tissue – So going now the we pulp that the is

I up while also this with making and year, is that other some how we’re – right I to side had – I And customers. the last right team to important up and think up we to that with see also point had we’re sales the challenges. certainly – knew beefing beefing progress we have – it have think on it guys the beef want going have team where we’re So relationship ramp-up on is to and the sales. volume, a also into to the certainly But the

Paul Quinn

on QX, on industry a the the the and seen? you the the like offset has some away-from-home are help fact you that year-over-year. that increase of terms of so prices the And de-sheeting pulp higher inflation consumer in side Okay. significantly increase price seen anything price Have insulated guys much cost you in would or mentioned

Richard Garneau

we maybe some eventually cost Well, – we that increase the to up going going to other very is seen going But But announcement. wait think the a market to the haven’t I price is react what trigger pulp difficult announcement. that. see to it’s are and to

Paul Quinn

year-over-year. like? Cogen anything that come last note, contribution that to the is or there down was, I should the expected XX% seemed I like Okay. And back up the on was had there from it to question Is going about

Richard Garneau

turbine affected so is that we we Dolbeau, that at it’s had because we the make have so the Well, those had of on to turbines. Bay, – XX%, XX outage two maintenance where Bay, know at you megawatts, and – we so were fourth big the it’s Thunder and the also in XX% about maintenance, had cold Dolbeau quarter Thunder

Paul Quinn

of Best luck in retirement, Richard. your Excellent.

Richard Garneau

you. Thank

Operator

Your with next go Hamir Please comes Patel question Markets. from CIBC Capital ahead.

Hamir Patel

Bay, for congratulations Well, voice mentioned us going I’ve And of that able some in you operational Calhoun strong the the miss what EBITDA highlighted? the lumber that hoping, restructuring failures fire you guys industry. And the quarter. you at certainly to newsprint, then the also from issues to was thought, and the specialty, had business, at and impact perhaps on you for start the EBITDA from kiln Thunder Yves. was that the Richard, Richard, what impact we’re the quantify might be we’ll in equipment your to

Richard Garneau

with restructuring. Well, the start let’s Okay. Calhoun

the and mill [indiscernible] to it’s and so studded you that usually as or – that we it’s not with see department only sawmills. by in have idea, wood an paper [indiscernible] even you mill pulp it’s Just give a in mill the it’s

two that, closed what and plant. the and line mill closed and chip with happened – we we closed the of facility, machines, log one so TMP we So also

terms on XXX by impact possession an has that in So people affected of that were reduction. that about

on So – well, that it’s wise going they with now began what the have where there. they mill so basically choice. believe that jobs bid they like it, happened, anywhere is to are It’s the really employees

like key obviously, the power So look pulp machine now at the pulp happened you dryer the or also at recovery the plant look board machines, and the before. the department board, what – and mill you if with

we than that have So we have possession, of all people with possession been you the XX% the that basically when have look filled less one-year key – have at experience.

So you manual. we have even can to imagine, you learn and provided the provided training, we though

a sometimes, But you react done make to job would how have when learn that while advance We is that than mitigate mechanical we I and to you learn have, the example, that. think have for they preview and there the better breakdown, to job have sure to a nothing impact. or to in on

the is have that’s a the the employees it’s knew I sum of that to So experience, more But and would basically the bit many well the think that, complex we – think – I we that certainly of your the that because that difficulties relearn difficulties we to skill It’s it’s have. reason that is, incremental and and some know it the we’re I improvement is I think so see why had quarter errors, so in what going quarter. way. it But first the in second quarter.

that that have good progress think been I there’s So achieved.

but driver. think I’ve one that there the we’re not the is Journal article it’s – I Street indicating was is that a shortage, the truck shortage, but also only facing certainly, into seen side, only not this reality. On it’s a there Wall that driver

would that in and was So we and one really small have challenge. eventually early of we think shortage and anticipated two we the communities, December was have weeks as important the a But a this as saw Northern not not knew the January. that labor we last I

that using in to strategy, where paper mill. trailers with put a larger basically place haul think now I So to we that the have chips the

but Woodland We’re and larger, to it’s to all sub-contractors. road using the program be because also working, equipment to to the use the attract that have are hiring in able road large more this people with special try –

So contractor. by transportation done all is the

to better extra address the been So we’re that mills an – have volume them to them to we But the with issues trying it this mill receive also forget the to that our operation. it’s increasing give has to we’re are to delivered difficult pulp address could truck, paper And with the because working by rail, so by also the and rail. support be it’s don’t address. equipped that

to and delivering work it’s I… we’re What I this address what I rail have that’s but continue the to issue So the question? training other more to – help. have driver. going of certainly chips, think, to that try think program going And to So the to is

Hamir Patel

I at to the operational newsprint, you the that and you fire get do EBITDA restructuring at mean, to just Calhoun sawmill, Bay them the sum understand I’m issues in if to think look in to pointed drag all up. – Thunder the QX? was some to I of in were the sort you a What of equipment failures you was Yes. trying trying

Jo-Ann Longworth

to the XX board was Well, million the kiln XX feet, at I Thunder million board think down look Bay it is feet. we way were

portion. So And the things, again, And mainly stellar specialty I going $XX that had to performance was wouldn’t of on suggest large because because of I’m of we two this focus price papers, quarter. issue that’s started we adjustment because million million. SG&A, this these our of during a in to $X seller, subscribe, it down

to to QX type those the had to sum share – QX And SG&A, see we I continue but similar project, we’ve in QX, I like Obviously, our if adjustment are up versus again for difficulties not as and reason up would our get that the get at price levels price see expected. share certainly wrap to it’s we Calhoun, items. quarters. in major in why no project So prior to specialty two as in price up specialty of go we

Hamir Patel

that for a for Jo-Ann. Thanks Great. Yves. question perhaps And

and for both On talk you about slide, the lumber pulp. output year this priority improving

the and both what up Canadian think targeting the of level wood is in industry segments your business, curious ramp potential you Eastern both and just background for Ontario Quebec production the in from production to what for curious Just you’re here? given products

Yves Laflamme

lumber? So on you mean

Richard Garneau

pulp. And

Yves Laflamme

pulp? And

Hamir Patel

Yes.

Yves Laflamme

Yes.

a far as other on yield Canada, course, mentioned, lumber. productivity, see Eastern was we potential and up we’re investing production with So as of as ramp to better a to have

lumber. less that So the it more means and byproducts

than as is So as increasing far mostly wood the having more supply. that, on the restriction –

limit that, what can proceed. know how volume we you much certain as of we – As have

Atikokan a Ontario. have we as company, interesting new Northwestern we gain an the assets So to with still have in Ignace, in get

do believe, better side that on production I lumber. can increase So and we on

the Saint-Felicien can on course, believe we So pulp increase that we pulp. of outlook, some volume for

it to there’s frequently more U.S. on and going work are We

can put in better that believe the volumes market asset could the So that and US. our we be we from more do in

Hamir Patel

Thank helpful. put both numbers volume you. you Any around that That’s uplift in can the segments?

Richard Garneau

less. –if Steve, X.X quarter on jump Well, about in. I may or pulp, per the slightly million tons we so produce

some So again pulp full I to Calhoun and think Saint-Felicien for that’s investment make planned we the increase dryer have itself to the potential what pulp on on mill the the we we capacity. haven’t have reached

have when dryer situation that the – and pulp Calhoun a But to special pulp machine we’re you dryer and – so drying basically machine is the use to three was the pulp the we pulp, pulp only have now using just And paper sewing the we when like the dryer as dryer. that equipment, So XXX the if was has done. and and excess. – the not you you XXX pulp used just basically between a machine, machine one there the machine address. moderate there – run used because obviously was issues was yet. day, obviously, tons some to the not And was And not per were push there we’re when there to after you item, that work not realize full-time, some reliability that have some by

in good efforts we with that focus think – market the we’re – And of to equipment, with we that that So are process pulp. are the on that I piece condition now a on especially we we it’s of this addressing. have going that

defects production. accelerate, increase pulp and dryer speed push to to going the on the up We’re the

pulp the So we capacity have the mill. in to

get is. to potential running this to have we and machine ready So where the

Hamir Patel

in have. that, Great. That’s for best retirement. Richard. the all Thanks All I

Richard Garneau

you. Thank

Operator

of with next question Bank Please ahead. Your America. Roger from comes Spitz go

Roger Spitz

you Hi. morning. good Thank and

us credit XX, since repaid you of senior of, further guess, the Firstly, your want are facility know also balances December up? you on at could facility today, Thank And and ABL you. $XX both million, credit tell XXXX. just I how I each those a secured to split your as

Jo-Ann Longworth

Roger, Jo-Ann. Okay. you. it’s Hi, How are

Roger Spitz

Great.

Jo-Ann Longworth

put just through that, Okay. not. sorry, to trying on it’s I’m

Roger Spitz

you second question to my while look going that up. I’m ask Jo,

Jo-Ann Longworth

Okay, go ahead.

Roger Spitz

tissue you is EBITDA what the say reported? Calhoun Can Atlas the tissue for the Calhoun tissue. the results which In segment, QX is and XXXX the – Tissue and of was business? And segment only EBITDA sales sales

Jo-Ann Longworth

net the so Yes, start-up our sales actually again. of $X tissue quarter, Jo-Ann, mill. million for included it’s was of cost which Roger, the rest Hi, tissue business the in Alma, was was Calhoun expense, which Calhoun is $X

Roger Spitz

Got it.

Jo-Ann Longworth

your question, sorry, the just the ABL… Okay. And for borrowings, borrowings the

Roger Spitz

Yes.

Jo-Ann Longworth

as …were December, $XX million sorry. of

Roger Spitz

Yes.

Jo-Ann Longworth

for And XX. of million, $XXX farm loan loan the total a the including term

Roger Spitz

Okay. And…

Jo-Ann Longworth

to a talk and $XX about those we’ll information on of that later? I affected the repayments million the with January you little don’t in have were how maybe

Roger Spitz

All I much. right. it. very you Thank appreciate

Operator

next comes Please Your with Sean TD question Securities. ahead. Steuart from go

Sean Steuart

Yves. and Richard of congratulations, and Couple morning Good Thanks. questions.

little the you Do to Sorry And order. how might QX you to long level inflation a dwell previous papers maybe you Calhoun. addressed And in specialty see just the cost levels take? most this back to suggested bit, quarters Jo-Ann on have it any of that to on XXXX? perspective would over But saw first we the you focus that of can this. quarters quarter normalized couple something to expect that it related we due of is on expect

Richard Garneau

we’re end see was I – and on Well, And by retraining. the I – – lot that and that that that of I’m quarter at to time to of improvements mentioned the that the should going obviously, be think everything I going be training But of a spending confident think it’s we’re going second in place. it that incremental.

issues of information. retraining, and control – because the managers sure all – they obviously So the all the into a that get – we right are training people share the are the the room the that when of all really have also our and that making working operation that training the

think, that I or that But with less so. a be they’re I going think year months than experience, to see has number going business you to with six i think how much skill that see can to able it’s to maximum see to than this. needed effort other XX% as be it So the is going efficiently. and to to the skills but basically the the operate have done address

Sean Steuart

obviously, you’re that price what offshore provide markets newsprint, markets? of in magnitude if you of terms a bit well. detail on focusing as you timing America, offshore in increased I’m question, for initiatives mentioned Also can in and just wondering Thanks the detail. you North Okay. little mentioned on but various

Richard Garneau

Yes.

It’s been some of newsprint for announced I that be So that announced Jo-Ann $XX is just to February. great, also and the have on in – not that. and has going the that $XX looking at well, we is think we

[indiscernible] so overall, are we now, just numbers at that have announcement looking the made many in I’m that that there affected, because increases So okay.

to for going March, look at we at at between on it’s I benefit and average, $XX $XX US$XX, and onboard that in depending and so look grades. again, on when that’s when be $XX of mechanical, to about example, So $XX we’re talking we’re newsprint, the March going it’s –

FCB and on white it’s FCA paper. and So all

increase increased lot to So February. a have of on overall, But call. in also here add we

another have We on $XX softwood. northern

have $XX the South. We on softwood from the

both North hardwood, in $XX and have $XX South [indiscernible]. and On of have the on we we February

So February all and think I implemented, so this going to March. detail are be

Sean Steuart

specifically markets newsprint, Richard, And broad-based for the markets you’re just offshore for hikes? price export all is that looking across your

Richard Garneau

it’s so America and $XX $XX Europe $XX UK example, in and that in and and Latin $XX, for $XX Europe I Asia, think between – also $XX, see we $XX. the was $XX Canada, and we between it’s Asia, in $XX, expecting and in between Well, $XX are $XX $XX and $XX UK, Latin to $XX and and America

Sean Steuart

for detail. that Thanks Excellent. all

much You don’t through have guys. next quarter. very go Thanks stuff again to that

Richard Garneau

you. Thank

do Someone to else is going it.

Operator

time. no this presenters. are like call the turn at further I’d the to over questions to There

Silvana Travaglini

that So today. conclude for call our Thank will you.

Richard Garneau

Thank you.

Operator

This call. conclude conference today’s

You may disconnect. now

Resolute Forest Products (RFP) 2 Feb 182017 Q4 Earnings call transcript